Beauchamp v. Retail Merchants' Ass'n Mut. Fire Ins. Co.

• Decision Date: 14 December 1917
• Citation: 38 N.D. 483,165 N.W. 545
• Parties: BEAUCHAMP v. RETAIL MERCHANTS' ASS'N MUT. FIRE INS. CO.
• Court: North Dakota Supreme Court

38 N.D. 483

165 N.W. 545

BEAUCHAMP

v.RETAIL MERCHANTS' ASS'N MUT. FIRE INS. CO.

Supreme Court of North Dakota.

Oct. 20, 1917.

On Rehearing, Dec. 14, 1917.

Syllabus by the Court.

The object of a fire insurance contract is to afford indemnity, and forfeiture stipulations and conditions in the policy will be construed, if possible, so as to avoid forfeiture and afford indemnity.

When an insurance contract is conditioned to become void in case there be a breach of a condition present or subsequent, the true meaning is not that the instrument is upon a breach thenceforth a nullity and has no legal existence, but only that upon a violation of the covenants by the insured, the insurer shall cease to be bound by his covenants.

The insurer may waive the conditions in the policy relating to forfeiture and nonwaiver, except when the insured, by the act, loses his insurable interest.

When the insurer has once manifested an intent to waive a forfeiture, it cannot subsequently withdraw the waiver, unless the acts constituting waiver were induced and occasioned by fraud on the part of the insured.

As a general rule a forfeiture is waived when an insurer, with knowledge of the act on the part of the insured which works a forfeiture, enters into negotiations with him, and induces him to incur trouble or expense under the belief that his loss will be paid.

A nonwaiver stipulation in the policy and a nonwaiver agreement executed by the insured after the loss and before or during the investigation by the adjuster will be construed strictly against the insurer.

Such stipulation and agreement will not be extended by implication beyond their exact terms, and do not prevent the insurance company from being bound by statements made and acts performed after it had fully investigated and to its satisfaction ascertained the cause of the fire and the amount of the loss.

Waiver is ordinarily a question for the jury; but where the facts and circumstances relating to the subject are admitted, or clearly established, and only one inference can reasonably be drawn therefrom, waiver becomes a question of law.

On Rehearing.

Syllabus by Editorial Staff.

A plaintiff is not required to reply to new matter in an answer not constituting a counterclaim, except by order of the court; but every allegation of new matter in the answer, not constituting a counterclaim, is deemed controverted by the plaintiff as upon a direct denial or avoidance by operation of law.

A party applying to a trial court for leave to amend a pleading has the burden of sustaining his application, and should show some reason justifying or requiring the court to grant the amendment; the application is addressed to the court's discretion, which should be exercised to promote the ends of justice.

The presumption is that the court's discretion on an application to amend was exercised to promote the ends of justice, and on appeal it must be shown that the discretion has been abused.

Assignments not argued will be deemed abandoned.

Appeal from District Court, Cavalier County; W. J. Kneeshaw, Judge.

Action by J. B. Beauchamp against the Retail Merchants' Association Mutual Fire Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Bruce, C. J., dissenting.Pierce, Tenneson & Cupler, of Fargo, for appellant. Grimson & Johnson, of Langdon, and Linde & Murphy, of Bismarck, for respondent.

CHRISTIANSON, J.

On July 29, 1914, the defendant issued to the plaintiff an insurance policy of the usual standard form adopted in this state, whereby it insured the plaintiff against loss or damage by fire in the sum of $3,000, upon a certain stock of merchandise in plaintiff's store at Olga, in Cavalier county, in this state. The stock was also insured in the sum of $2,500 by another insurance policy, issued by the Northwestern Mutual Fire Insurance Company. This latter policy also insured household goods belonging to plaintiff in the sum of $500. On January 22, 1915, the stock of merchandise was, together with the building wherein it was contained, accidentally, totally destroyed by fire. The plaintiff immediately notified the defendant and the Northwestern Mutual Fire Insurance Company of the loss, and these two companies sent their adjuster, one Larkin, to adjust the losses. Larkin arrived about three weeks after the fire. Upon his arrival at Olga he asked for the books of account, and was informed by the plaintiff that they were in the safe, which was still lying on the ground close to the place where the fire had occurred. A blacksmith was sent for, who broke open the safe, and Larkin and the plaintiff took the books and papers to plaintiff's house and looked them over. In examining the books it was discovered that a book in which plaintiff kept the record of his purchases had been destroyed by the fire. Plaintiff informed Larkin that this book had been left on the plaintiff's desk the night the fire occurred. The safe, however, contained a ledger in which accounts were kept of all the goods sold on time, and the plaintiff informed Larkin that the cash received from cash sales had been deposited in the bank. Larkin upon receiving this information went to the bank and examined the bank books to ascertain the amount of such sales. Larkin arrived at Olga in the forenoon, and left on the morning of the day following. Before leaving he requested plaintiff to accompany him to Grand Forks. Two versions are given of the reasons for such request. Plaintiff says:

“He asked me if I would go with him to Grand Forks, or Fargo, and look over the ledger, and he said we had some work to do, and that we could do it better there, and I went with him.”

Larkin says that some discussion arose with respect to the last inventory taken in March, 1914; that plaintiff stated he believed that this inventory had been sent to the Grand Forks Mercantile Company, and that it was principally for this reason that he suggested that plaintiff accompany him to Grand Forks. The Grand Forks Mercantile Company, however, did not have such inventory. Mr. Larkin thereupon requested that he (plaintiff) write the various wholesale houses and obtain from them statements or inventories of the goods which they had sold to the plaintiff since the last inventory was taken on March 1, 1914, and Larkin prepared a form of the letter to be so sent. Plaintiff acted in accordance with this request, and prepared and sent letters to the various wholesale houses, and obtained statements or inventories from them. He also obtained statements from the bank. These statements and inventories he submitted to Larkin. At Larkin's request plaintiff came to Fargo, where they went over the whole matter. Larkin testified that from the information furnished him by the plaintiff he determined that the goods destroyed were worth $4,204.62. The policies limited the liability of the insurers to three-fourths of the actual value of the goods insured, and hence Larkin fixed the amount of liability of the companies under the two policies at $3,153.47; defendant's proportion of such liability being approximately $1,720. On his direct examination Larkin testified:

“Q. Did you as adjuster have these two companies agree to settle for this amount ($3,153.47)? A. I did.”

It appears from Larkin's testimony that in fixing the value of the goods he deducted 20 per cent. from the wholesale prices for depreciation. Larkin claims that there was little or no dispute between him and the plaintiff with respect to the basis on which he computed the amount of loss. This, however, is denied by the plaintiff who claims that there was a difference of opinion between them as to the amount to be allowed for depreciation, cost of handling, and matters of that kind. Plaintiff further claims that Larkin refused to take into consideration statements furnished by some of the wholesale houses; that the bank account represented in addition to the moneys received from cash sales made at the store the proceeds of certain grain raised by plaintiff upon farms owned by him, and that Larkin refused to deduct these items. Larkin on the other hand claims that the statements were all considered, and that he deducted the amount of the deposits represented by the sale of grain. It is undisputed, however, that they were unable to agree upon the amount of the loss, and that plaintiff refused to accept the amount offered, claiming that the stock at the time of the fire had an actual value of approximately $12,000.

The present action was brought and the summons and complaint therein served on the defendant on April 18, 1916. The defendant appeared and answered on May 15, 1916. Notice of trial was served on June 2, 1916, noticing the case for trial at the term appointed to commence on June 13, 1916. The June term was adjourned until July 3, 1916. On July 3, 1916, defendant's attorneys mailed an amended answer to plaintiff's attorneys with request that they consent to the proposed amendments. The amendments averred that plaintiff had failed to comply with the provisions of the policy with respect to taking inventories, and keeping such inventories and books of account correctly detailing purchases and sales of stock securely locked in an iron safe during the hours the store was closed for business. Plaintiff's attorneys refused to consent to the amendments. Defendant's attorneys thereupon, on July 12, 1916, served upon plaintiff's attorneys an application for leave to serve and file a proposed amended answer, accompanied by an order to show cause, returnable on July 17, 1916. The application was presented to the court immediately before the cause was called for trial, and a jury therein selected; but, owing to the absence of one of plaintiff's counsel, it was not argued until the day following, and during the interim the trial jury had been selected. The only showing made in support of the application to amend consisted of an affidavit by one of defendant's attorneys setting up...